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Some Information That Aid You To Understand Can A Small Business Go Public?
I find it to be an universal belief in the small business community that small businesses can't go public until they have noteworthy revenues, say something on the order of $10 to $20 million per year.
This is completely false.
I have been taking Small Businesses and Introduced companies public as a consultant for over 15 years now. And for 15 years I have been constantly asked in diverse ways " Can a small business like ours elevate capital by going public? We just have a million dollars in revenue. Aren't we very small?"
The response has been and still is "Yes, you can go public. And no, you are not very small."
What is too small?
Fine truly nothing. A company who is bringing in one million in revenues would be no issue to take public. But it is in fact not regarding your revenues, it is concerning your business plan. If you are working on a development stage business plan and you are achieving success, then we can probably take you public with that alone. If you are making five, ten or twenty thousand every month that is useful as it simply indicates that you are executing on your business plan.
It has become tougher and tougher to take a company public with no revenue and no business maneuver because the SEC and FINRA are legally trying to eradicate micro cap fraud, but yes it could still be accomplished. If you have no revenues, however, you will need to have patience, some money in the bank to guarantee you can live for a couple of years, and you will have to be making genuine development on your business plan to show the powers that be that you are a "true" company and not just a "sham" set up for micro-cap scam.
If you are a small business and you don't think to be mom-and-pop forever, then "Going Public" is something you must look into in the quite early stages. "Public" money is usually a lot economical as compared to "private" money.
I have seen private companies who feel they are very small to "go public" give up half of their company for a small six figure investment. At times companies with revenues in the millions feel they are too small and taking the business capital route they raise ten or twenty million but finish with only five to six percent of the company in some years.
This sort of dilution is totally pointless. The similar amount of money could be increased by going public while maintaining 60-65% ownership
Obviously there are downsides to going public early as well, but many of those have to do with being preyed upon by non-professionals, fraudsters, and others who truly don't know what they are doing. If you look into your advisers and get advice and structuring and referrals from experts who know what they are doing, you can eliminate most of the downside of going public early.
And if you feel you are probably the next EBay or Google or Microsoft type of company, going public early on without venture capitalist may be worth billions and billions of dollars.
Bill Gates simply owns about fourteen percent of Microsoft. Just think how rich he would be if he owned sixty percent!
Now after the "Can I truly go public?" sort of queries the next set of questions I usually get are "How do I raise capital when I go public? Do I do a merger reverse? " or " I see ads that say - Purchase reverse merger shell - should I do that? " But those are queries for another article. Stay Tuned.
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